home finance

  May 17, 2022
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Home Finance

Eligibilty:

  • An Indian resident or NRI.
  • Above 21 years of age at the commencement of the finance.
  • Below 65 years of age when the finance matures.
  • Either salaried or self employed.

Bank determines your financial eligibility based on your repayment capacity. The financial eligibility for acquiring home finance is augmented by clubbing income of your father/spouse /mother/son, by clearing your outstanding debts, by stretching your finance tenure, salaried individuals can increase their eligibility by showing their performance linked income or bonus earned.

Interest Rates:

There are two types of interest rates:

  • Fixed interest rates :This type of interest rate for the finance remains the same throughout the tenure of the finance.
  • Floating interest rates:This type of interest rate fluctuates according to the market lending rate. This may go up or down. You may have to pay more EMI if it goes up or you may have to pay less if it goes down

Documents:

Age Proof:

  1. Passport
  2. Voter’s ID card
  3. PAN card
  4. Ration card
  5. Employer’s ID card
  6. School leaving certificate
  7. Birth certificate

Address Proof/Residence proof:

  1. Passport
  2. Ration card
  3. Rent agreement, if you are staying on rent
  4. Bank pass book
  5. Allotment letter from company if you staying in company quarters
  6. Electricity bill
  7. Telephone bill

Name Change proof (If applicable):

  1. Copy of the official gazette.
  2. Copy of newspaper advertisement publicizing the name change.
  3. Marriage certificate.

Investment Proof (If applicable):

  1. Bank statement for the last six months of all operating and salary accounts.
  2. Bank statement for the last six months of all current accounts, if self employed.
  3. Any other photocopies of investment held, if required by the bank.

For Salaried:

  1. Employment certificate from the employer.
  2. Copies of pay slips for last three months and TDS certificate.
  3. Latest Form 16 issued by employer.

For self employed:

  1. Copy of audited financial statements for the last 2 years.
  2. Copy of audited financial statements for the last 2 years.
  3. Copy of memorandum of association and articles of association if it is a company.
  4. Profit and loss account for the last 3 years.
  5. Income tax assessment order.

Property Title Proof:

  1. Original Sale agreement with Builder/Developer duly registered, Registration receipt
  2. Tripartite agreement from builder/developer
  3. Land documents indicating ownership, e.g.- Photocopies of title deeds, if applicable
  4. A certificate by the legal advisor of the builder to the effect that the builder has a good reputation and it is free from encumbrance and other charges.
  5. A certificate from builder’s Chartered Accountant certifying that the builder has not mortgaged the property anywhere else.
  6. Certified true copy of approved plan.
  7. Copies of receipts of payments made to builder/developer.
  8. Allotment letter
  9. Possession letter
  10. Lease agreement, if applicable (Property bought from a development authority)
  11. Mortgage deed if the Bank opts for a registered mortgage.
  12. No Objection Certificate from the developer, society or development authority as applicable
  13. Personal Guarantees, if applicable.
  14. In case of alternate or additional security, documents for the same depending upon the security details.
  15. For self-construction: Approved plans and clearance certificates along with estimates
  16. Post dated cheques for the EMIs.

Home Finance process:

Applying for the Finance: After you have selected your lender, you have to fill in the application form wherein the lender requires complete information about your financial assets & liabilities; other personal & professional details together with the property details & its costs.

Documentation & Verification Process: You are required to submit the necessary documents to the bank which will be verified together with the details in the application.

Credit & default check: Bank checks out the borrower’s finance eligibility (through repayment capacity) & the amount of finance is confirmed. The borrower’s repayment capacity is reached which is based on the income, salary, age, experience & nature of business etc. Bank also checks credit history through the Cibil Score which plays a critical role in deciding & approving your finance application. Low Credit Score implies that the bank upfront rejects your application on the basis of earlier credit defaults; on the other hand high credit score gives a green signal to your application.

Bank sanctions Finance & Offer letter to the borrower: After the credit appraisal of the borrower bank decides the final amount & sanctions the finance, the bank further sends an offer letter to the borrower which constitutes the details like rate of interest, finance tenure & repayment options etc.

Acceptance Copy to the Bank: The borrower needs to send an acceptance copy to the bank after the borrower agrees with the terms & conditions in the offer letter.

Bank checks the legal documents: The bank further asks the legal documents of property from the borrower to check its authenticity so as to keep them as a security for the finance amount given. The next step involved is the valuation of the property by the bank which determines the finance amount sanctioned by the bank.

Signing of agreement & the finance disbursal: The borrower signs the finance agreement & the bank disburses the finance amount.

The home finance is a finance taken by a borrower from the bank issued against the property/security intended to be bought by on the part by the borrower giving the banker a conditional ownership over the property.

Eligibility:

Basic Eligibilty:

  • An Indian resident or NRI.
  • Above 21 years of age at the commencement of the finance.
  • Below 65 years of age when the finance matures.
  • Either salaried or self employed.

Bank determines your financial eligibility based on your repayment capacity. The financial eligibility for acquiring home finance is augmented by clubbing income of your father/spouse /mother/son, by clearing your outstanding debts, by stretching your finance tenure, salaried individuals can increase their eligibility by showing their performance linked income or bonus earned.

Interest Rates:

There are two types of interest rates:

  • Fixed interest rates :This type of interest rate for the finance remains the same throughout the tenure of the finance.
  • Floating interest rates:This type of interest rate fluctuates according to the market lending rate. This may go up or down. You may have to pay more EMI if it goes up or you may have to pay less if it goes down

Documents:

Age Proof:

  1. Passport
  2. Voter’s ID card
  3. PAN card
  4. Ration card
  5. Employer’s ID card
  6. School leaving certificate
  7. Birth certificate

Address Proof/Residence proof:

  1. Passport
  2. Ration card
  3. Rent agreement, if you are staying on rent
  4. Bank pass book
  5. Allotment letter from company if you staying in company quarters
  6. Electricity bill
  7. Telephone bill

Name Change proof (If applicable):

  1. Copy of the official gazette.
  2. Copy of newspaper advertisement publicizing the name change.
  3. Marriage certificate.

Investment Proof (If applicable):

  1. Bank statement for the last six months of all operating and salary accounts.
  2. Bank statement for the last six months of all current accounts, if self employed.
  3. Any other photocopies of investment held, if required by the bank.

For Salaried:

  1. Employment certificate from the employer.
  2. Copies of pay slips for last three months and TDS certificate.
  3. Latest Form 16 issued by employer.

For self employed:

  1. Copy of audited financial statements for the last 2 years.
  2. Copy of audited financial statements for the last 2 years.
  3. Copy of memorandum of association and articles of association if it is a company.
  4. Profit and loss account for the last 3 years.
  5. Income tax assessment order.

Property Title Proof:

  1. Original Sale agreement with Builder/Developer duly registered, Registration receipt
  2. Tripartite agreement from builder/developer
  3. Land documents indicating ownership, e.g.- Photocopies of title deeds, if applicable
  4. A certificate by the legal advisor of the builder to the effect that the builder has a good reputation and it is free from encumbrance and other charges.
  5. A certificate from builder’s Chartered Accountant certifying that the builder has not mortgaged the property anywhere else.
  6. Certified true copy of approved plan.
  7. Copies of receipts of payments made to builder/developer.
  8. Allotment letter
  9. Possession letter
  10. Lease agreement, if applicable (Property bought from a development authority)
  11. Mortgage deed if the Bank opts for a registered mortgage.
  12. No Objection Certificate from the developer, society or development authority as applicable
  13. Personal Guarantees, if applicable.
  14. In case of alternate or additional security, documents for the same depending upon the security details.
  15. For self-construction: Approved plans and clearance certificates along with estimates
  16. Post dated cheques for the EMIs.

Home Finance process:

Applying for the Finance: After you have selected your lender, you have to fill in the application form wherein the lender requires complete information about your financial assets & liabilities; other personal & professional details together with the property details & its costs.

Documentation & Verification Process: You are required to submit the necessary documents to the bank which will be verified together with the details in the application.

Credit & default check: Bank checks out the borrower’s finance eligibility (through repayment capacity) & the amount of finance is confirmed. The borrower’s repayment capacity is reached which is based on the income, salary, age, experience & nature of business etc. Bank also checks credit history through the Cibil Score which plays a critical role in deciding & approving your finance application. Low Credit Score implies that the bank upfront rejects your application on the basis of earlier credit defaults; on the other hand high credit score gives a green signal to your application.

Bank sanctions Finance & Offer letter to the borrower: After the credit appraisal of the borrower bank decides the final amount & sanctions the finance, the bank further sends an offer letter to the borrower which constitutes the details like rate of interest, finance tenure & repayment options etc.

Acceptance Copy to the Bank: The borrower needs to send an acceptance copy to the bank after the borrower agrees with the terms & conditions in the offer letter.

Bank checks the legal documents: The bank further asks the legal documents of property from the borrower to check its authenticity so as to keep them as a security for the finance amount given. The next step involved is the valuation of the property by the bank which determines the finance amount sanctioned by the bank.

Signing of agreement & the finance disbursal: The borrower signs the finance agreement & the bank disburses the finance amount.